58 yr old's wondering if we can retire now

[Mountain skier]

Hello. I have learned so much in this forum. Thank you for your contributions to my financial education. I would like to seek your opinions about retiring now. My wife and I are 58. She retired in the autumn.

Finances: approx $930,000 total...including:
Sep-ira: $270,000
Roth's: $70,000
HSA's: $11,000
Taxable liquid: $570,000
AA: 55% cash CD's; 45% index stocks
pensions: $30,000/yr- no COLA
SS- wife at 62: $15,000, me at 67: $26,500
house paid for- no debts
kids on their own now

Yearly expenses: $55-60K including health ins premiums thru ACA ( that is the goal)- this figure includes vacations expenses too

I will draw down savings next 3 yrs: $30k/yr ages 59-61; then $15k/yr from ages 62-66. When my SS starts at age 67 we might not need to use our savings nearly as much.

By the way just bought new HVAC system.

Am I safe to retire?- your opinions are greatly appreciated. Thanks

 

[REWahoo]

Am I safe to retire?

http://www.early-retirement.org/for...-answer-before-asking-can-i-retire-69999.html

 

[bigcmagor]

Looks a little snug to me. I sure understand the desire to join your DW though. A couple more years of the grind and pushing social security out for a larger payout might make those final years less worrisome. I suppose it depends on how full your w*rk bs bucket is and how willing or able you are to pull in expenses when the shtf.

 

[ivinsfan]

You don't mention at what age your pension starts, IMO that's an important detail. Looking at your spend it looks like the pension will start as soon as you retire. Will it grow at all if you wait until a later age or work a couple more years?

 

[Dtail]

Sounds like your pension starts right away. Have you included other lumpy expenses in your budget or separate emergency fund for a new roof, new cars, etc?

Overall it sounds to me like you are good to go.
I ran your numbers through Firecalc and get 100% success with 76k maximum spend out to 95 y.o.

 

[REWahoo]

Yearly expenses: $55-60K including health ins premiums thru ACA ( that is the goal)- this figure includes vacations expenses too

What about taxes - are they in that $55-60K number?

 

[joeea]

My wife and I are 58. She retired in the autumn.

Finances: approx $930,000 total...including:
Sep-ira: $270,000
Roth's: $70,000
HSA's: $11,000
Taxable liquid: $570,000
AA: 55% cash CD's; 45% index stocks
pensions: $30,000/yr- no COLA

How are the pensions split? Joint and survivor percent?

SS- wife at 62: $15,000, me at 67: $26,500
house paid for- no debts
kids on their own now

Yearly expenses: $55-60K including health ins premiums thru ACA ( that is the goal)- this figure includes vacations expenses too

I will draw down savings next 3 yrs: $30k/yr ages 59-61; then $15k/yr from ages 62-66.

Why so little draw down if your expenses are higher for the next 3 years? Are you already drawing your pensions?

When my SS starts at age 67 we might not need to use our savings nearly as much.

You should really experiment with https://opensocialsecurity.com before making your SS claiming decisions.

Depending on who is the higher earner and by how much, you could benefit greatly by delaying one until 70.

Am I safe to retire?

Maybe, if your expense are accurate for the long run, the ACA stays around, healthcare in general doesn't skyrocket, and inflation stays low.

Seems a bit tight to me.

 

[mamadogmamacat]

Also seems a bit sketchy to me as well, for two. Any significant traveling will I think be unrealistic on that budget unless you live in a very LCOL area.

I have about 20% more than you and am 60/40 AA still, as I was before retiring 3 yrs ago.
Otherwise remarkably similar except I'm single.

 

[aaronc879]

I would retire today in your situation. However, there are several variables that could make you decide to keep working. Do you like your job, do you despise it? Are you willing to cut back on expenses if you need to? Are the pensions both yours and is there a survivor policy? You dying early would be the main concern. Is there enough for your wife with just a small-ish SS and no pension? I think she would still be ok so I would go ahead and retire.

 

[HI Bill]

Yearly expenses: $55-60K including health ins premiums thru ACA ( that is the goal)- this figure includes vacations expenses too

I will draw down savings next 3 yrs: $30k/yr ages 59-61; then $15k/yr from ages 62-66. When my SS starts at age 67 we might not need to use our savings nearly as much.

Am I safe to retire?

Have you run this through FIRECALC? I'd suggest you make a donation to FIRECALC, then enter your yearly spending differences. Are you already taking the pension?

The AA is likely too conservative to keep inflation at bay over the long-term, especially since the pensions aren't COLA'd, and the future of the ACA is unkown. My main concern is that if the markets tank in the next 5 years AND you have an emergency, then your finances will be in jeopardy.

 

[Dtail]

Have you run this through FIRECALC? I'd suggest you make a donation to FIRECALC, then enter your yearly spending differences. Are you already taking the pension?

The AA is likely too conservative to keep inflation at bay over the long-term, especially since the pensions aren't COLA'd, and the future of the ACA is unkown. My main concern is that if the markets tank in the next 5 years AND you have an emergency, then your finances will be in jeopardy.

See post #5.
Doesn't "regular Firecalc" effectively take into account that there are different spending in different years based on when the income is available?

 

[HI Bill]

Doesn't "regular Firecalc" effectively take into account that there are different spending in different years based on when the income is available?

Yes, except for 'lumpy' expenses. You can enter start dates for pensions and SS and other incomes/expenses. With the full version, you can also adjust for anticipated differnces in annual spending (e.g., at age 75 you plan to stop travelling, and at age 85, pay for LTC).

 

[Dtail]

Yes, except for 'lumpy' expenses. You can enter start dates for pensions and SS and other incomes/expenses. With the full version, you can also adjust for anticipated differnces in annual spending (e.g., at age 75 you plan to stop travelling, and at age 85, pay for LTC).

Yes realize that. I took his change in expense spending to match up with beginning his pension/beginning her SS/beginning his SS.
Nevertheless, I did ask him about lumpy expenses.

If one believes in SS not being cut, why do you feel there is concern here?

 

[pb4uski]

Hello. I have learned so much in this forum. Thank you for your contributions to my financial education. I would like to seek your opinions about retiring now. My wife and I are 58. She retired in the autumn.

Finances: approx $930,000 total...including:
Sep-ira: $270,000
Roth's: $70,000
HSA's: $11,000
Taxable liquid: $570,000
AA: 55% cash CD's; 45% index stocks
pensions: $30,000/yr- no COLA
SS- wife at 62: $15,000, me at 67: $26,500
house paid for- no debts
kids on their own now

Yearly expenses: $55-60K including health ins premiums thru ACA ( that is the goal)- this figure includes vacations expenses too

I will draw down savings next 3 yrs: $30k/yr ages 59-61; then $15k/yr from ages 62-66. When my SS starts at age 67 we might not need to use our savings nearly as much.

By the way just bought new HVAC system.

Am I safe to retire?- your opinions are greatly appreciated. Thanks

You need to do more analysis but I think you will be ok.

As I understand it your annual gap will be $30k a year for the first 4 years, then $15k a year for the next 5 years... then once you start SS your pension and SS will exceed your spending. So until you start your SS you'll need $195k for the gap and you have $930k.

So once you start SS you'll have income of $71.5k a year plus withdrawals from what is left of your $930k portfolio after using $195k for those first 9 years of retirement.

 

[Mountain skier]

The pension can start immediately. Will set up as 100% joint survivor meaning spouse would collect 100% of amount if other spouse dies.

 

[dtbach]

The pension can start immediately. Will set up as 100% joint survivor meaning spouse would collect 100% of amount if other spouse dies.

How much is that going to take out of the pension/mo?

 

[Mountain skier]

How much is that going to take out of the pension/mo?

The $30k/yr is with the 100% joint surviorship

 

[militaryman]

It appears your expenses ($60K) are fully covered by your Pension and SS @ 62 --- You are just electing to delay YOUR SS until 67 (smart move) but if you did not you'd have >$16K SS + wife's $15K SS and the $30K pension = $61K -- So just using the $30K per year from savings until 62 and then savings is a big bonus bucket "in case"

I'd feel very comfortable with your plan!

 

[BigNick]

The $30k/yr is with the 100% joint surviorship

You might want to reconsider the decision to go for 100% joint survivorship. It can seem like a "nice" thing to do, but once the funeral expenses are paid for the first partner to die, the second may not need (assuming you have money set aside for possible LTC for the second partner) or even want the same level of income, for example if s/he is less likely to travel alone. If a 70% (or whatever) survivorship pension were to get you $X more per year, what value of X would make you think of taking it? (I didn't get this option with my w*rkplace pension, so I dodged having to think about this issue!)

PS: If you have already thought extensively about this then please ignore this comment, but I guess you knew to expect some slightly impertinent questions when you posted!

 

[pb4uski]

With respect to living expenses I think BigNick makes a valid point, but the other thing to consider is that taxes may end up being much more for a single than a couple and could very well make up any decline in living expenses... also, the surviving spouse's Medicare Part B and Part D costs may be higher if the surviving spouse's income is over $85k.

 

[ivinsfan]

You might want to reconsider the decision to go for 100% joint survivorship. It can seem like a "nice" thing to do, but once the funeral expenses are paid for the first partner to die, the second may not need (assuming you have money set aside for possible LTC for the second partner) or even want the same level of income, for example if s/he is less likely to travel alone. If a 70% (or whatever) survivorship pension were to get you $X more per year, what value of X would make you think of taking it? (I didn't get this option with my w*rkplace pension, so I dodged having to think about this issue!)

PS: If you have already thought extensively about this then please ignore this comment, but I guess you knew to expect some slightly impertinent questions when you posted!

i'd only consider this if delaying the SS to 70 for a full survivors benefit from SS. Remember the remaining spouse already loses one SS check.